August Stock Issuance Up 10.3%, Corporate Bond Issuance Slows Down

[Asia Economy Reporter Ji-hwan Park] Last month, the total funds raised by domestic companies through stocks and corporate bonds decreased by 7.9% compared to the previous month. While stock issuance increased by nearly 1 trillion won due to a rise in the number and amount of initial public offerings (IPOs), corporate bond issuance dropped by more than 2 trillion won.

According to the "Direct Financing Performance of Companies in August" released by the Financial Supervisory Service on the 24th, the total funds raised by domestic companies through stocks and corporate bonds last month amounted to 193.599 trillion won, down 7.9% (16.615 trillion won) from the previous month.

The scale of stock issuance last month (22 cases) was 44.741 trillion won, a 10.3% increase from the previous month (17 cases, 40.54 trillion won). Specifically, there were 12 IPOs with a stock issuance scale of 4.0877 trillion won, a 27.4% increase compared to the previous month (7 cases, 32.083 trillion won). The issuance scale expanded significantly due to large IPOs for KOSPI listings such as Krafton (2.8008 trillion won) and Lotte Rental (425.5 billion won).

Rights offerings numbered 10 cases with a total scale of about 386.4 billion won. While the number of cases remained the same as the previous month, the amount decreased by 460.7 billion won (54.4%).

The scale of corporate bond issuance was 148.858 trillion won, down 2.0802 trillion won (12.3%) from the previous month. By type, general corporate bond issuance was 4.62 trillion won, sharply dropping 87.1% from the previous month. The Financial Supervisory Service explained that the number of issuances plummeted to 4 cases due to the seasonal off-season caused by semi-annual report submissions and vacation season, along with increased interest rate volatility following the base rate hike (August 26, 0.50% → 0.75%).

Looking at the purposes of corporate bond issuance, 90.6% was for operating fund procurement, making up the majority. Facility funds accounted for 9.4%, and there were no issuances for debt repayment purposes. This contrasts with the previous month, where mid- to long-term bonds mainly for debt repayment accounted for about half of corporate bond issuance. Issuances centered on high-grade bonds rated AA or higher amounted to 520 billion won, accounting for 83.9%.

Financial bond issuance last month was 123.740 trillion won, an 8.5% (969 billion won) increase from the previous month. Issuance of financial holding company bonds decreased by 74.6% compared to the previous month. Securities companies also reduced issuance by 74%. On the other hand, bank bonds increased by 45.5%. Credit card companies and installment finance companies also increased corporate bond issuance by 17.3% and 2.4%, respectively.

The scale of asset-backed securities (ABS) issuance was 773.3 billion won, a 156.3% increase from the previous month. As of the end of August, the outstanding balance of corporate bonds was 615.1683 trillion won, up 0.6% (3.821 trillion won) from the previous month.

Commercial paper (CP) issuance amounted to 381.592 trillion won, a 16.7% increase from the previous month. Short-term bonds increased by 9.5% to 1,141.150 trillion won compared to the previous month.